Supreme Court tariffs case, Fed chair pick loom as twin tests for Trump’s economic agenda in 2026

Two key economic policy decisions are on the horizon in Washington: a Supreme Court ruling on tariffs and the White House’s expected announcement of the next Federal Reserve chair. Both developments carry significant implications for trade, markets and the future of U.S. monetary policy.

At the Supreme Court, two cases, which President Donald Trump has called “life or death” for the U.S., have forced the nation’s highest court to confront how far a president can go in redirecting U.S. trade policy.

The suits — Learning Resources Inc. v. Trump and Trump v. V.O.S. Selections Inc. — were brought by an educational-toy manufacturer and a family-owned wine and spirits importer challenging Trump’s tariffs.

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Both cases turn on a central question: whether the International Emergency Economic Powers Act (IEEPA) gave the president authority to impose the tariffs, or whether that move crossed constitutional lines.

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Tariffs are taxes the government places on imported goods. Although companies pay these taxes at the border, they often cover the added cost by raising prices, which means consumers ultimately shoulder much of the burden. 

Since Trump announced sweeping “Liberation Day” tariffs in April, total duty revenue has climbed to $215.2 billion in fiscal year 2025, which ended Sept. 30, according to the Treasury Department’s Customs and Certain Excise Taxes report.

That revenue strength has carried well into the new fiscal year. Since Oct. 1, the government has collected $96.5 billion in duties, according to Treasury’s latest statement.

Meanwhile, two candidates are vying for a role that would shape the direction of U.S. monetary policy: Kevin Hassett and Kevin Warsh.

The appointment to lead the world’s most powerful central bank comes as persistently high living costs test Trump’s economic agenda. The Federal Reserve, which sets borrowing costs and influences inflation, remains one of the most consequential institutions for Americans’ day-to-day affordability.

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The next Fed chair would assume one of the most influential posts in U.S. economic policymaking, overseeing interest-rate decisions and the central bank’s efforts to keep inflation in check.

Warsh, a former Morgan Stanley banker, has emerged as a vocal critic of current Fed leadership, sharpening his attacks as he positioned himself as a potential replacement for Chair Jerome Powell. He became the youngest person to serve on the Federal Reserve Board of Governors in 2006.

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Hassett is Trump’s top economic adviser and a loyal defender of the administration’s policies. He currently serves as director of the White House’s National Economic Council, and held two senior roles during Trump’s first term and advised the president on economic policy during the 2024 campaign.

Treasury Secretary Scott Bessent, who helped shape Trump’s shortlist for the Fed’s top job, said he has known Warsh and Hassett for more than 20 years and views both as equally qualified.

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Trump has called for sharp rate cuts and urged the Federal Reserve to bring its benchmark interest rate down to 1% to jump-start economic growth. 

Trump’s criticism of Federal Reserve Chairman Jerome Powell, whom he appointed to the role in 2017, has at times turned personal, with the president giving the Fed chair mocking nicknames.

Powell is set to finish his term in May 2026, when the next chair will take over.